Almost as if reacting to this deal, Amazon has pumped Rs 2,600 crore in its India operations.

Lately, Flipkart’s imminent acquisition by Walmart has hogged all the limelight. Analysts estimate that Walmart is in the process of buying approximately 70 percent stake in Flipkart for somewhere between $14.5-15.5 billion at a valuation of approximately $20 billion. Google parent Alphabet too is expected to buy around 10 percent stake for around $1.5-2 billion.

While the word acquisition is being bandied around quite a bit, Greyhound Research claims this could be more on the lines of a partnership. “This deal is more inclined to be a partnership than an acquisition, which allows Flipkart to continue operating in a near as-is fashion,” writes Sanchit Vir Gogia, Chief Analyst, Founder and CEO of Greyhound Research. “The company has established partnerships in key markets like Japan (Rakuten), China (JD.com), UK (Sainsbury-ASDA), US (Google) among others.”

Post the conclusion of this deal, Flipkart will no doubt gain financial and operational muscle. According to Gogia, Kalyan Krishnamurthy is expected to continue as CEO, and Binny Bansal as the executive chairman. However, Sachin Bansal could finally opt for an exit.

How Flipkart benefits with Walmart

Flipkart is more of a marketplace, while Walmart is more of a logistics and supply chain expert. According to Gogia, Walmart “will be able to extend this expertise to managing physical goods in the digital world – a strength that Flipkart lacks. This strength is a significant differentiator in a marketplace dominated by thin margins and worsened by steep discounting policies.”

Gogia adds that Walmart’s expertise in the grocery segment will also benefit Flipkart. “Walmart has exceptional understanding and network in this area and we can well expect the combined entity (under Walmart’s guidance) to focus significantly on selling groceries and other agri products via both the Flipkart marketplace and Kirana stores,” Gogia writes.

Impact on Paytm and Amazon

Needless to say, the Flipkart-Walmart deal will also have huge impact on some of the Indian e-commerce site’s rivals – especially Amazon India. Others who are likely to feel an impact include Paytm Mall, TataCliq, and Shopclues to name a few. “In the light of this aggressive and head-to-head competition between the Big3 namely Walmart (including Flipkart), Amazon and Alibaba (read Paytm Mall) we can well expect further consolidation and acquisition of specialized eCommerce companies that will allow the Big3 to gain dominant market share in newer segments,” Gogia writes.

Adrian Lee, Research Director, Gartner says, “Smaller players constantly face a problem of scaling up their operations. However, this does not mean that they will be forced to exit. The smaller players in many cases are more agile and open to new business models. They should concentrate on specialization within their domains to build up a valuable cache of users seeking differentiated retail experiences.”

Amazon India’s reaction

In response, Amazon has reportedly poured in Rs 2,600 crore into its India operations. This is one of the biggest fund infusions by the Seattle-based company, and is said to be for the marketplace business. Amazon India’s new funds come at a time when chief rival Flipkart is set to be acquired Walmart.

The infusion of funds was spotted by ET on Amazon India’s filings with the Registrar of Companies. With this, Amazon’s total investment into its marketplace business – Amazon Seller Services – crosses the Rs 20,000 crore mark.

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In little over a year, the company has poured in over Rs 10,700 crore into its Indian operations. Back in January, Amazon India had received Rs 1,950 crore from its parent company. A couple of months before, it had received Rs 2,900 crore. Back in 2016, CEO Jeff Bezos had committed to investing $5 billion in Amazon’s India operations.

Impact on consumers

The intense competition between e-commerce sites can only come as good news for us consumers. In the quest to constantly outdo each other, consumers could expect deeper discounts, more product categories, and also availability of international brands.

“I fully expect discounts/promotions to continue unabated. As the e-commerce players mature into more profitable businesses, it is very unlikely that discounts will stop. More of the promotional support will be passed back to the suppliers who want the user traffic,” Lee says.

Gogia also adds, “Another key outcome for the consumers will be better-managed deliveries given the increase in investment in supply chain and infrastructure. This will also translate to the availability of products in Kirana stores which implies better pricing, quicker deliveries and overall better service levels.”